What does “Participating Policyholder” and “Divisible Surplus” mean for a Life Insurance Owner?

As a participating policyholder, you are eligible to receive an equitable portion of a Company’s earnings, known as “divisible surplus”, in the form of policy dividends. The surplus from which dividends are paid comes primarily from three sources:

1. Mortality Savings – The favorable margin between actual death claim experience and the amount expected based on the mortality table used to determine the premium.

2. Investment Earnings – Earnings on Company investments that exceed the guaranteed interest required to build up death benefit reserves and meet contractual obligations. The  guaranteed interest rate for a particular policy or rider is set at issue and does not change over the life of the policy. The guaranteed interest rate is reflected in the policy’s guaranteed cash value increases.

3. Expenses – The difference between actual expenses incurred and the expenses assumed in determining the premium.


The Difference between and Stock and a Mutual company. Some stock companies do have participating whole life insurance products because they used to be a mutual company before they converted to stock and they kept their same participating policy arrangement.

May 14, 2013 · Jennifer · No Comments
Posted in: Uncategorized

Leave a Reply